LAHORE: Some large sugar producers are persevering with demand for government permission to export the sweetener in spite of multiple rejections of the request by the government.

Their request, according to official sources, is based on claims that the industry has significant ‘exportable surplus’. However, the authorities have resisted them, saying such a decision could not be made on the basis of unverified and unauthenticated ‘surplus’ stocks as this may spike the retail prices of the sweetener to well above Rs200 a kilo.

At its last meeting days ago, a media report said, the federal authorities had decided to obtain verified data on the claims of exportable sugar surplus, including the expected local production from beet, and provincial recommendations on the issue before giving permissions.

The government reportedly has serious doubts over the industry’s claims of surplus sugar stocks. “The authorities believe that the industry is inflating stocks to manipulate the government to allow exports,” an official told this reporter. “The claim of the PSMA [Pakistan Sugar Mills Association] to export sugar is based on dubious figures which implies that the price might shoot up beyond Rs200 per kilo, leaving an adverse impact on the lower and middle class consumers and food inflation, if allowed to export.”

The industry has been trying to seek export permissions since before the start of the harvest. In November last year, the millers had asked for permission to export 500,000 tonnes, but the caretaker government rejected the request to avoid potential shortages and price hikes in the domestic market.

It may be recalled that the previous PDM government had allowed export of nearly a million tonne sweetener, which led to a surge in the retail prices as the rates soared to a record high of Rs180-200, forcing withdrawal of the export order from August 10.

According to a report, the sugar stocks stood close to 4.5 million tonnes at the end of April. This means the country would have a surplus of 800,000 tonnes at the start of the next harvest in November. “As per federal direction, one-month additional stock is required to be kept before permission to export can be granted. That leaves the so-called surplus at about 270,000 tonnes against the alleged claims of 1.5 million tonnes for export,” the official said. “Only a few large mill owners have the exportable surplus and they are bent upon creating problems for consumers and the authorities for personal profit. If the surplus is exported we will again have the kind of situation that we witnessed during the administration of Imran Khan.”

So far the Shehbaz Sharif government has resisted the demand of powerful sugar millers with a lot of political clout. “With the wheat mess already wiping out political capital of the ruling party, a sugar price crisis would prove detrimental to the party’s reputation,” a financial analyst observed.

Published in Dawn, May 8th, 2024